Saturday, February 12, 2011

KNOW YOU KNOW

It costs 1.62 cents to mint and distribute penny. Really. And this isn't anything new. Since 2006, it's cost slightly more to produce a penny than the one cent it is worth, leading to a loss of of about $20 million dollars, total, in 2009. The main culprit? The metals used to make it. (More after the break)

A penny is 97.5% zinc and 2.5% copper, and as the price of these materials have gone up, so has the cost to produce the coin. (It was worse in 2007, but the soft economy has softened the blow a bit.) Given this, it shouldn't be surprising that there's been legislation introduced to eliminate the penny or change its metallic composition to something cheaper such as steel. But by and large, these efforts have gone unheeded. Part of the reason? The zinc lobby -- or, more accurately, the Jarden Zinc Company in Greeneville, Tennessee. Jarden Zinc, as of 2007, is the sole supplier of zinc-based "penny blanks" used to mint the one cent piece (an odd monopoly, to say the least), and as such, has an enormous interest in maintaining the use of the coin and in its current state. Between 2004 and 2006, the U.S. Mint paid Jarden $140 million for penny blanks; in 2006, Jarden's parent company paid a lobbying firm for $180,000 to help throttle anti-penny legislation.

But that's not the only cause, of course. Other penny supporters cite historical sentiment, the perceived dishonor to Abraham Lincoln if "his" coin is removed, and the notion that charitable giving will decrease (via penny jars) if the coin is discontinued. And in defense of Jarden Zinc, the price of the raw materials fluctuates, of course, and the problem is not unique to pennies or zinc. Nickels, which are 75% copper and 25% nickel, are also produced at a loss: the five-cent coin requires 5.79 cents to manufacture and distribute.

Bonus fact: Greeneville, Tennessee is not just the home of Jarden Zinc. In the early 1800s, Andrew Johnson made a home there, and ended up winning election as the town's mayor in 1834. (He resigned shortly afterward upon winning election to the Tennessee House of Representatives.) Two decades later, Johnson would become Vice President of the United States, in Abraham Lincoln's administration. On April 15, 1865, upon the death of President Lincoln, Johnson assumed the the Presidency, taking over for the man currently depicted on the penny.